New Saudi minister is believer in reform and low oil price
http://gulfnews.com/business/sectors/energy/new-saudi-minister-is-believer-in-reform-and-low-oil-price-1.1821509Al Falih, who replaces veteran Al Nuaimi as oil minister, believes Saudi Arabia could reform thanks to low oil prices
Published: 16:44 May 8, 2016
London/Dubai: It was January 2016 and oil prices had crashed to their lowest in more than a decade.
Saudi Arabia’s health minister, Khalid Al Falih, a favourite to take over the oil ministry from his mentor Ali Al Nuaimi, was not panicking.
Al Falih told an audience of oil executives, bankers and policymakers at the World Economic Forum in Davos that the world’s top oil exporter might benefit from oil below $30 (Dh110) per barrel. It could help to speed up reform and restructure the economy, and move Saudi Arabia to a smaller and more effective government and unleash its private sector, he said.
Do you not think Prince Mohammad, who is just 30, is doing it all a bit too fast for the generally conservative Saudi society, Al Falih was asked.
“The Royal Highness is very ambitious where he wants Saudi Arabia to be sooner rather later. I can assure you that everybody who works around him is very excited by his vision and energised by his energy,” he told the audience.
The writing was on the wall, said the executives leaving the Davos conference. Al Falih would soon become oil minister reporting to Prince Mohammad, who is quickly turning into the world’s most powerful oil figure.
Three months later, Prince Mohammad had a chance to showcase his might when he effectively ordered the Saudi delegation led by Al Nuaimi not to agree to a global production freeze deal with Opec and non-Opec Russia.
But even though the Riyadh-born and US-educated Al Falih has long been tipped to replace Al Nuaimi, his fortunes and career kept zigzagging from Saudi Aramco’s chairman to health minister until finally securing the job on Saturday — combining energy, industry and mineral resources in a new super ministry.
Rebalance
Al Falih takes the job in a much better market environment compared to January — oil prices have indeed recovered from their January lows of $27 per barrel to trade at around $45 last week on th prospect that the market has began to rebalance thanks to lower US output.
Born in 1960, Al Falih joined Aramco in 1979, and went to study engineering at Texas A&M University in 1982 on an Aramco sponsorship programme.
He probably knows every oil chief executive in the world as he was the key negotiator behind a Saudi initiative to jointly develop gas resources with oil majors in early 2000.
Over the past year, when Al Nuaimi was carefully choosing his words or not commenting at all, Al Falih has become more vocal about his views that the oil market needs to rebalance through low prices and that the Saudis have the resources to wait.
“That doesn’t really point to somebody who would invest a lot of time and energy in trying to reconcile different Opec members,” said Richard Mallinson from Energy Aspects.
Al Falih says job creation and economic reforms are top worries for the Saudi government these days, not an obsession with oil price levels.
“Those transitions sometimes takes years, sometimes decades. The current low oil prices will give us an impetus to accelerate this,” Al Falih said in Davos in January.
